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14 June, 15:49

Elisa needs money to repair her home air conditioner, so she pawns her bicycle. The pawnbroker loans Elisa $270. Eleven days later, Elisa gets her bicycle back by paying the pawnbroker $279.90. What annual simple interest rate did the pawnbroker charge Elisa? Assume 360 days in a year. The pawnbroker charged Elisa a simple interest rate of

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  1. 14 June, 19:30
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    The pawnbroker charged Elisa a simple interest rate of 120% per year

    Explanation:

    I = PRT/100

    I is the simple interest = amount - principal = $279.90 - $270 = $9.90

    P (principal) is the loan given Elisa = $270

    R is the annual simple interest rate

    T (time) is the duration the loan is paid back with interest = 11 days = 11/360 year

    9.9 = 270 * R * 11/360 * 1/100

    R = (9.9*360*100) / (270*11) = 120%

    Annual simple interest rate = 120%
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